Exclusive interview with Prof. Lawrence White, Part 2

Lawrence H. White is an  economics professor at George Mason University who teaches graduate level monetary theory and policy.

Lawrence White

As described by the Wikipedia, "White earned his BA at Harvard University (1977) and PhD at the University of California at Los Angeles (1982). Before his current role at George Mason University he held a position as F. A. Hayek Professor of Economic History with the University of Missouri–St. Louis Economics department from 2000 to 2009, teaching American Economic History, Monetary Theory, and Money and Banking. Previously, he was Assistant Professor at New York University and Associate Professor at The University of Georgia in Athens, Georgia.

"Articles by White on monetary theory and banking history have appeared in the American Economic Review, the Journal of Economic Literature, the Journal of Money, Credit, and Banking as well as other professional journals. White is an associate editor of the "Review of Austrian Economics", a contributing editor to the Foundation for Economic Education's magazine The Freeman and an adjunct scholar of the Cato Institute."  Thegoldstandardnow.org is pleased to present this exclusive interview in three parts, of which this is the second:

Q:  Are you familiar with Lewis E. Lehrman's The True Gold Standard and Money, Gold, and History?

A. Yes. Lew Lehrman has a deep appreciation for the fundamental economic, historical, and constitutional arguments for a gold standard.  But he also understands the morality of honest money.  I agree with his proposal that in returning to an international gold standard, we should opt for a classical gold standard and not for a Bretton Woods II with official reserve currencies.

Q:  Are you familiar with Kwasi Kwarteng's War and Gold?  Thoughts?

A: I saw your very positive review of it a few months ago. It is on my to-read list but I haven’t read it yet.

Q:  Are you familiar with Nathan Lewis's Gold, The Monetary Polaris?  Thoughts?

A: As you know, I commented on Nathan’s book at a Cato Institute event.  I offered a few academic quibbles, but the book does a good job marshalling historical evidence to demonstrate the chief merits of a gold standard.

Q: Are you familiar with Steve Forbes and Elizabeth Ames's Money?  Thoughts?

A: Not yet. It is also on my to-be-read pile.

Q:  Why, in your opinion, was Milton Friedman so tenaciously hostile to the gold standard?  You did some important work dispelling his contention that the resource costs were extravagant.  Do you think he actually believed his own analysis on this or simply was being polemical?

A: I have great respect for Friedman.  I think he was completely sincere on gold, as he was on every other issue, even in those cases where I don’t entirely buy his analysis.  I think that he was genuinely trying to estimate the costs of the extreme case that he called an “honest to goodness” gold standard, but that he made a mistake by not taking the further step of applying his method to the more relevant case of a modern gold standard system that economizes on gold reserves, and seeing how dramatically modernity reduces the cost .  In later work he came to recognize that an ideally managed fiat standard is not available in this world, that the incentives of the central bank work against it, and that real-world fiat standards have been enormously costly.  In the face of new historical evidence, he walked back his early-career dismissal of free banking.  But not his position on the gold standard.

Q:  You've done some important work in critiquing the critics of fractional reserve banking.  Would you care to address this again?

A: I’ll just say that those who want to outlaw modern intermediation (and by modern I mean post-Dark-Ages), and build our payment system instead on literal gold warehousing, are embracing something close to the extravagantly expensive monetary system of Milton Friedman’s caricature.  It’s a kind of financial Luddism.

To read Part 1, click here.


 

 

Kathleen M. Packard, Publisher
Ralph J. Benko, Editor

In Memoriam
Professor Jacques Rueff
(1896-1978)

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